You are going to want to work on what will have the most impact over the next year? There are is only one way to achieve this goal. Connect your engagement factors to performance indicators such as revenue, profitability, productivity, and turnover. Some organizations turn to consulting firms like ours that have already facilitated this process in a generic manner across many data points, and others want to create a more targeted correlation based on their business. Obviously, the second and more pinpointed way to determine impact, a validation study, is more expensive. Either way, this is a very different avenue from choosing items based on whether they were rated low versus rated high. We break down engagement indicators into four key categories.

Top Targets (Low Rating, High Impact)

The items in this category represent what an organization will want to focus on during the next period; usually a year. These are items that receive low ratings from employees in a survey and also have the greatest impact on issues such as productivity, retention, and organizational results. Working on these particular issues will not only have the greatest impact on an organization’s employee engagement results, but it will also have the maximum impact on the organization’s success.

High Priorities (High Rating, High Impact)

These items are important to leverage or maintain and should be an organization’s next focus. These items received high ratings and also have significant impact on the organization’s success. Consider these items strengths that are working to the organization’s advantage. If these items fall backward in ratings, performance of the organization will suffer.

Average Priorities (Low Rating, Low Impact)

These items reflect low ratings and low impact. Essentially, they are organizational weaknesses that have little impact on the performance of an organization. These items typically will not influence productivity or retention a great deal. However, any item(s) rated low should be reviewed to determine if there is a pattern in the ratings that tells a story, or there is a need to shore up a real weakness because it is getting in the way.

Low Priorities (High Rating, Low Impact)

The items reflect strengths of an organization, because they are rated highly by employees on a survey, but they typically have little impact on issues like productivity, retention, and organizational results. While we try not to fall backward on these types of items, the impact of falling backward would most likely be negligible. We would not recommend an organization spend its time focusing in this area.

When we work with clients, there are times we need to steer them away from some of the items rated low because we know from our research that working on those items will not produce the results that addressing another item will.

United States spends more than $720 million annually on improving employee engagement, according 2012 research from industry analysts Bersin & Associates. The Center for Creative Leadership, PerformancePoint, Kenexa, and Gallop also track engagement figures. Some of the recent stats include:

a majority of employees (58 to 90 percent) do not trust management

only 14 to 58 percent of employees believe that management is ethical and honest

only 15 to 30 percent of employees are actually engaged.

Think about it: If we spend more than $720 million each year, why is engagement so low?

Bersin & Associates noted in 2012 that in the United States alone, we spend more than $720 million annually on improving employee engagement. According to sources such as the Center for Creative Leadership, PerformancePoint, Kenexa, and Gallup, between 58% and 90% of employees do not trust management, between 14% and 58% believe that management is ethical and honest, and between 15% and 30% are actually engaged. Think about it! If we spend more than $720 million a year, why are we getting
those results?

It doesn’t end with the survey We know engagement efforts work at times. Study after study demonstrates that engagement improves productivity, reduces absenteeism, improves customer satisfaction, allows organizations to be more innovative, creates a safer work environment, and improves retention. So why is it that only 16% of companies that use engagement surveys see positive results? Why is it that only 65% of employees feel they are thriving at work? There are several reasons that is happening:

(1) Leadership doesn’t recognize it as a significant problem. I realize it’s taboo to say that. However, if we were looking at a capital expenditure, such as machinery that was functioning at the levels we just described, leadership would do something and be committed to real results.

(2) People see engagement efforts as simply administering a survey. Surveys don’t solve problems; they give you information. Surveys are a view of the past, much like looking in the rear-view mirror of your car. They tell you very little about where you are going, but a great deal about where you have been. Surveys aren’t bad; however, many organizations misuse them, and they end up not serving any purpose or sometimes hurting the company.

(3) We use survey results to fix symptoms and create action plans. Action planning lasts for two to three months, and then most managers go back to “business as usual.” There are no long-term substantial changes in the organization. Even when the survey concludes that there are issues with work relationships or lack of training and development, organizations respond to what they see in the data, which typically has to do with an item or a question in the survey. The problem is that the results tell you what to focus on but usually don’t tell you why it’s an issue. It’s impossible to address the issue unless you find out why it became a problem. To determine the cause, you have
to dig, and that’s uncomfortable and challenging.

(4) We spend most of our money measuring, not changing. If we are going to change, we need to look across the organization at the cultural attributes that cause us to struggle with achieving engagement. Send the right message Culture is in the stories people tell, the symbols people hold up or see, and the rituals we follow in our organizations. For instance, some organizations assign parking places based on seniority or level in the
company. That describes a culture in which certain people are valued more than others and employees’ value isn’t built on their productivity or work product but on their status. There are organizations with beautiful, well-tended corporate headquarters, yet their manufacturing plants or retail branches need significant repairs or contain broken equipment that hinders employees’ performance. That sends a message that corporate is more valued than the people in the field doing the work.

What are the messages you’re sending your people through your culture?

Lord knows it’s expensive and time consuming, and even when they get it, it’s not clear how much students actually learn. But the one thing you could always say about a college degree was that it led to better jobs because it served as a reliable and invaluable signal to employers about a job applicant’s intelligence and persistence.

Or maybe not. Michael Rosenbaum knows from fancy degrees — he’s got a BA and law degree from Harvard, along with a master’s from the London School of Economics. But at the two software companies he has founded in Baltimore, 40 percent of the programmers have no college degrees, and half of the others got theirs from community colleges. The reason is simple: Statistically speaking, a degree from a fancy college has zero correlation with success in writing software.

Such are the insights from “people analytics,” a hot new area in human resource management that aims to bring “big data” to the task of corporate hiring and promotion. What “moneyball” did for baseball, people analytics promises to do for human resources, replacing intuition, old-boy networks and outmoded rules of thumb with computerized tests, database searches and quantifiable performance metrics.

Given the time and money companies sink into hiring and recruitment, the results are decidedly mediocre. According to a survey conducted by Arlington-based Corporate Executive Board, nearly a quarter of all new hires leave within a year, while Gallup reports that half of those who do stay reported being “not engaged. The resulting drag on profits and productivity represent a multibillion dollar opportunity for firms such as Rosenbaum’s Pegged Software, which helps hospitals and nursing homes reduce turnover of entry-level workers by putting the right people in the right jobs.

This is actually an old idea, going back to the 1950s when large corporations first made widespread use of psychological and intelligence tests to screen applicants for jobs. But over the years, the process began to look more expensive and less effective. By the 1990s, companies had reverted to scanning résumés for relevant degrees and years of experience, followed by subjective impressions gleaned from unstructured interviews. The result, according to one study, is that more often than not, managers hire people just like themselves.

What’s surprising isn’t that companies are beginning to use more objective techniques to make personnel decisions, says Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School of Management. “What’s surprising is that, for the last 20 years, they’ve been going with their gut.”

In the early versions of “people analytics,” companies asked managers to identify their best-performing employees and then tried to find patterns in each group based on biographical information, work history and their answers to computerized personality and intelligence tests. Job applicants were then “scored” based on how closely their background and test answers matched those high-performing employees.

Rosenbaum says the problem with the early efforts is that the results tended to correlate less with the actual strengths of the job candidates than with their cleverness in taking the tests. And by relying on the managers’ rating of current employees, the process reintroduced a high degree of bias and subjectivity into the scoring system.

The more recent and effective iterations of these systems start by collecting whatever data they can about the performance characteristics of current employees — how long they have been on the job, how many calls they process or sales they close. In the computerized tests, the purpose of many questions isn’t to see whether someone gives the “right” answer, but to see how long it takes them to answer it, or how consistent it is with other answers they have given, or what words they use to answer more open-ended questions.